Every year payment of taxes is followed by an income tax return (ITR) which is to be filed with the Government of India (usually 31st July, of the following year for individual taxpayers). Every taxpayer should be aware that filing ITR is not optional if you have taxable income. Notably, this year the due date for filing ITR was extended upto 5th August.
The income tax department does provide you an extended date for filing your ITR but this extension comes with a cost. In this article we try to explain the consequences of filing your ITR after the due date and what you may lose out of it.
A chance to revise your return
If you have already filed your ITR before the due date and later noticed that you have missed few things, you have a chance to revise your return and rectify the mistakes. There is no limit on the number of times you can revise your return. But every return can be revised only upto the end of the following year. For example, for Financial Year 2015-16, you can revise your ITR upto March 31, 2017.
Now if you have missed the due date (ie August 5th), you loose this opportunity to revise your return. Which means, once you file your ITR after August 5th, that will be considered final and nothing can be modified, so be careful while filling your particulars in the belated return.
Lesser interest on tax refund from the Government
Did you know that if you have any income tax refund due, the Government pays you an interest @ 1% per month starting from April 1, of the next year? Which means, that if you have an income tax refund of Rs 10,000 and the Government pays you the refund in the month of August, you would get an interest of Rs 500.
Be mindful that you may not get such interest from the Government if you file a belated return (ie after the due date). In case of belated return, the interest on refunds (if any) is paid by the Government only from the date on which the return is filed by you.
No carry-forward of losses
If you have any losses under any heads of income (for example capital gains or business/ profession), you are allowed to carry forward such losses to the future years and set-off such losses against income of that year. The effect? Your income of the next year reduces to the extent by which you have reduced your losses. As a result, you pay less taxes due to reduced income.
But the law provides this option only to the early birds. Hence, if you file your ITR after the due date, you would not be allowed to carry-forward your losses to the next year. The effect? These losses will remain unutilised forever.